Many of our customers ask us “Does it make sense to raise capital now or later?” The answer depends upon a variety of factors including the strategic goals, near term objectives, revenue profile, cash on hand, and cash burn. Assessing the urgency and sequence of taking on new investors seems to be a never-ending question.
When should we take on new capital? How does this question relate to other business activities? When should we bring on new revenue? When should we adopt new innovation? When should we grow our pipeline? When should we update our marketing plan? Of course the answer to all of these questions is NOW!
Like revenue growth and demand generation, planning and executing fundraising is an ongoing activity. It is performed again and again across hundreds of thousands of companies in a never-ending cycle that feeds innovation and technology advancement. One’s ability to succeed in fund raising, in many ways, determines their destiny. Perfectly executing all of Jack Welch’s “4 Es” of leadership or Mr. Welch’s 29 Leadership Secrets will make you a fantastic leader, but without sufficient cash, you are either out of business or re-capping your company faster than you can say “I am a good leader”.
The process starts by looking within. Each investor, large or small, will look for the basics: a good business model, revenue growth, strategy, financial model, value creation, barriers to entry, among others. Successful funding campaigns start with solving these internal business challenges. It takes hard work and an ability to empathize with ROI calculations. Framing the positive attributes actually helps to build a better company. The company is then run through the eyes of an investor. No pun intended. What is the plan for liquidity? Are we being capital efficient? What are the sources and uses of capital?
The capital sourcing journey is a rinse-and-repeat process that has massive deterministic impact on achieving success. Outside expertise will help you through the process, ensure efficient and effective execution, and leverage relationships to help you connect with the right capital sources – the ones that are already looking for you.
So, it may not be the question of “Now or Later”, but rather, it is the ongoing repeatable process of improving your company while connecting with the right capital sources.
For more information about Heritage Ventures and how we share in your risk, please contact either Cameron Ackbury Cameron@HeritageVentures.com or Chris Wheeler ChrisWheeler@HeritageVentures.com.